A group of MP's who are part of the The Environmental Audit Committee said that ring-fencing fuel duty would help build trust in green taxation.
"The Treasury needs to stop giving green taxes a bad name," said Joan Walley, who chairs the committee. "Recent budgets have created the perception that environmental taxes are simply being used to pinch extra pennies from people."
The committee said that green taxes "cannot be all stick and no carrots" and it called for simple links to be made between taxing things that pollute and investing in more environmentally friendly alternatives.
Using fuel duty to cut the rising fares on buses and trains was given as a straightforward example.
The committee has published a report on the environmental impact of the Budget.
It criticised the decision to cut a penny from fuel duty while doing nothing to increase incentives to use less polluting alternatives.
It also said that the proposed changes to air passenger duty would not cut emissions and the gradual reduction of fuel duty rebate, now called Bus Services Operators Grant, will not help keep bus fares at present levels. Instead operators will simply increase fares to match the reduction in duty.
Colin Sellers 7/07/11
